A large real estate investment firm announced that two major San Francisco hotels would be closing, marking another significant business loss for the city. A number of factors, including crime, high taxes and regulations have helped spark significant economic headwinds for the California city.
Park Hotels & Resorts Inc. said this week that it was likely going to close down both its Hilton and Parc 55 hotels in the city.
Park Hotels CEO Thomas J. Baltimore Jr. stated that the company “made the very difficult, but necessary decision to stop debt service payments on our San Francisco CMBS loan.”
He added that it was in the “best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market.”
The lodging leader said that the city’s “path to recovery remains clouded and elongated by major challenges.”
— Scott Lincicome (@scottlincicome) April 30, 2023
Baltimore cited a number of concerns including high office vacancy, “street conditions,” and a reduced convention calendar over the next four years.
All of these together will “negatively impact business and leisure demand and will likely significantly reduce compression in the city for the foreseeable future,” he said.
The company, which operates 46 hotels and resorts, expects to save more than $200 million over the next five years from the decision.
The likely hotel closures represent a continuing trend of closed or downsized businesses in San Francisco.
The city has suffered a number of major factors which many conservatives argue are self-inflicted. The City by the Bay has seen a sharp increase in crimes of various types, including theft.
However, many cases of theft and shoplifting go unreported, meaning that the true rate is higher than official statistics report.
Furthermore, the city is home to one of the largest homeless populations in the nation. The almost 40,000 estimated homeless population represents an increase of more than one-third in the last four years.
Recent efforts to handle the large street population have so far been ineffective even as Sacramento has increased funding related to homelessness to nearly $5 billion over the last three years. The city has traditionally had one of the largest costs of living nationwide.
Homelessness is commonly cited by residents as one of San Francisco’s major issues.